Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said the US labour market remains resilient. He said it has cooled, but is still “decent to pretty good”. However, business reports on hiring suggest companies are becoming more cautious.
Kashkari said Kevin Hassett’s comments about Fed staff research were “just another step” to undermine the Fed’s independence. He said the Fed will keep making decisions based on data and analysis, and will ignore other “distractions”.
Ai And Productivity Outlook
He said most businesses are already seeing benefits from AI. He said AI could raise productivity over the next five to ten years.
He said the Fed is careful about using AI internally. He said strong guardrails are in place so AI systems cannot access confidential data.
Kashkari said crypto is “utterly useless”. He said it is unclear what stablecoins can do that Venmo and similar services do not already offer.
A resilient labour market suggests fewer interest rate cuts in 2026 than markets currently expect. The January jobs report supports this view, with nonfarm payrolls rising by a solid 215,000. In this setting, derivatives that bet on a summer rate cut, such as some Fed Funds futures contracts, look increasingly risky.
Market Implications And Positioning
In 2025, markets repeatedly priced in a dovish Fed pivot, only to be disappointed when wage growth stayed strong. With average hourly earnings up 0.4% last month, this pattern may be continuing. Because of this, options strategies tied to Treasury bond ETFs that benefit from yields staying high could make sense over the next few weeks.
At the same time, optimism about AI-driven productivity is boosting tech sentiment today. After a strong Q4 2025 earnings season, the Nasdaq 100 is already up 8% year-to-date, and implied volatility in AI-related stocks is still high. This points to continued large price swings, which could make strategies like collars or straddles on leading tech names attractive.
Kashkari’s sharp criticism of crypto adds to the regulatory pressure that built in late 2025 and has cooled investor interest. Bitcoin is down nearly 15% from its recent highs and is struggling to hold the $85,000 support level. Comments like these from policymakers could lead to another drop. Buying put options on publicly traded crypto miners or exchanges could be one way to benefit if the weakness continues.
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